3D Still A Hit With Foreign Audiences, But Domestically It’s a Different Story

Thanks to a 3D overhaul, “Jurassic Park” roared back into theaters last weekend, racking up nearly $20 million domestically despite being twenty years old. That success is an exception to how 3D has been performing in this country.

Like the theatrical movie business it was counted on to revive, 3D is growing, but its expansion is being fueled by foreign, not domestic, audiences.

In China and Russia, 3D showings of films routinely contribute between 80 percent to 90 percent of their box office take, according to Michael Lewis, the CEO and chairman of RealD. In the United States, that figure is between 40 percent to 60 percent.

“In places like China, the blush is still on the rose,” Ian Jessel, president of Legend 3D, which handles 3D conversions for films like “Top Gun,” told TheWrap. “It’s considered trendy and very hip, and all these theaters are desperate for 3D product.”

Stateside, the number of 3D releases fell from 45 in 2011 to 36 in 2012, according to the Motion Picture Association of America. Meanwhile, cineplexes are being built in Asia at the rate of nine screens per day, with six of those equipped for 3D, according to Jessel. (See chart)

Take “G.I. Joe: Retaliation,” which Paramount held back for nearly a year so it could be converted to 3D. The gambit paid off to the tune of $80.3 million at the foreign box office on its first weekend. But domestically, where the reaction was more muted, only 48 percent of “G.I. Joe”s’ $41.2 million opening came from 3D showings.

There are important reasons why studios remain enamored of the format. In places like China with flexible interpretations of copyright laws, 3D is key to convincing audiences to put down the bootlegs and head to the multiplex.

“In a lot of these markets, if you want to see a new film, you can go out on the street corner and buy a cheap copy,” Lewis, chairman and CEO of 3D technology maker RealD, said. “But 3D is impossible to replicate.”

Since studios get 69 percent of their box office revenue from international markets, 3D continues to be a key element to the success of big-budgeted films like “The Avengers” that are made as much for moviegoers in Hong Kong or Seoul as they are for U.S. audiences.

Domestically, there is evidence that audience enthusiasm for 3D has plateaued in the United States as the glow of “Avatar” and its dash of novelty become nearly ubiquitous.

“‘Stabilized’ is probably a charitable version of how things are looking in the U.S.,” Bruce Nash, founder of the box-office statistics site The Numbers, said. “But I do think we’ve reached a real business model now that is much more sustainable and it’s using 3D for blockbusters and a few niche films. Projections of continued growth domestically were probably a little unrealistic.”

Despite fewer 3D films produced last year, the format contributed the same revenue to the overall box office in the United States and Canada, $1.8 billion in ticket sales, according to the MPAA. That was roughly in line with last year, but a drop from a high of $2.2 billion in 2010.

Lewis observed that the growth of 3D internationally mirrors the growth of film receipts in general.

“It’s a mature market domestically, not a growth market,” he said. “But two thirds of the film business is taking place outside of our borders and it’s growing and it’s not abating in places like Russia and Latin America.”

Surveys indicate that moviegoers in the U.S. have tired of 3D because of annoyance over having to wear glasses and an unwillingness to pay the $3 to $4 surcharge. When asked why they don’t want to see a movie in 3D, 51 percent of respondents to a recent Worldwide Motion Picture Group study of 1,129 moviegoers said it was not worth the extra money, while 52 percent said it was too expensive and 42 percent said they did not like the eyewear.

In China, where 3D tickets cost roughly $16, which is more than U.S. moviegoers typically pay, the hefty price makes the experience seem more special. Here, many moviegoers just see it as a financial hardship.

“This upcoming summer, every weekend there’s a new 3D film,” Kristen Simmons, senior vice president of the Worldwide Motion Picture Group, said. “At some point audiences have to choose the ones they’re going to see in 3D, because they don’t have the money to see them all in 3D.”

Nash also argues that the market for 3D re-releases of blockbusters like “Titanic” is shriveling up and that this week’s 3D conversion of “Jurassic Park” is the rare library title that warrants the treatment. A niche that began with such promise when a spruced up, 3D version of “The Lion King” debuted to more than $30 million domestically two years ago, has run out of steam. A 3D re-release of “Star Wars: The Phantom Menace,” for instance, netted a disappointing $23 million opening when it premiered last year, and a 3D conversion of “Finding Nemo” only managed a $16.7 million debut when it hit theaters last winter. After Lucasfilm was sold to Disney last winter, the company postponed plans to revive the other “Star Wars” prequels in 3D, saying it would concentrate on producing a brand new series of sequels.

Some analysts believe that the slowdown in the domestic market for 3D is a momentary blip. Eric Wold, an analyst with B. Riley & Company, said that movies like “Iron Man 3” and “Man of Steel,” which will be released in 3D, should ensure that the format has a stronger showing this year.

Last year, 3D accounted for approximately 18 percent of the worldwide box office. Lewis projects that this year it will represent more than 20 percent of global box office revenue for the first time since 2010. He believes that last year’s slowdown was partly attributable to a backlash against 3D conversions, which he argues have become more economical and are being done more effectively.

“A couple of years ago, the thought-process was to create as many 3D films as possible and the conversions were done very cheaply and quickly and the results backfired, because it made people nauseous and it just set the whole thing back, Wold said. “Last year we were still dealing with that backlash.”

There’s also the bottom line aspect. A few years ago, 3D conversions could eat up 15 percent to 20 percent of a film’s overall budget. Today, that cost has gone down dramatically to the point where a conversion can cost between $5 million to $8 million, making 3D a more attractive option.

Despite the domestic challenges, 3D has proved itself in an important respect. Four years after “Avatar” kicked off a 3D revolution in filmmaking, Hollywood has shown that the rose-tinted glasses aren’t just a fad. They’re here to stay, with 3D films topping box office charts and gaining legitimacy thanks to critical hits like “Life of Pi,” which became the first 3D film to win a Best Director Oscar last year.

With upcoming films like Baz Luhrmann‘s “The Great Gatsby” set to deploy the medium, some 3D entrepreneurs believe that the format will continue to show that it can enhance more than just comic book movies.

“This wasn’t a gimmick, these films have contributed to making important statements in the world of cinematography and filmmaking,” Vince Pace, co-chairman of the 3D technology company Cameron Pace Group, said. “When done correctly, 3D can offer more than a theme park ride. It can bring across more emotion, more character, more of a sense of experience. When we do more of that we will be much closer to where we were with ‘Avatar.'”